The Virginia Retirement System (VRS) appeals the decision of the circuit court reversing VRS's denial of the disability retirement benefits application filed by Ricky A. Blair, appellee. The circuit court ordered VRS to make disability payments to Blair and awarded Blair " legal fees and costs." On appeal, VRS argues that the circuit court misapplied the " substantial evidence" standard of review required by the Virginia Administrative Process Act (APA or Act) and that the court erred in awarding Blair fees and costs under Code § 2.2-4030. We agree.

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I. Background

Blair entered VRS in October 2005, when he became employed as an equipment operator for the City of Hampton. His job duties included operating dump trucks, sign trucks, and back rollers; making repairs to vehicles and mechanical tools; setting up sites with signs, cones, and barricades; loading and unloading materials and equipment; using tools such as shovels, pick axes, jackhammers, brooms, and tack buckets; and keeping inventory. After sixty-one months of service, Blair retired on November 1, 2010, at age 55. His last day of work was October 29, 2010. Later in November, Blair made his first application to VRS for disability retirement benefits, seeking a backdated effective date of November 1, 2010. The bases for his claim included alleged arthritis, Chronic Obstructive Pulmonary Disease (COPD), knee problems, mini strokes, a pinched nerve in the neck, memory issues, dizziness, and depression.

Blair's initial application included his own description of his disabilities; physician's reports from two doctors, one from a pulmonologist, Dr. Todd E. Duggan, focusing on Blair's COPD, and the other from Dr. Adrian T. Baddar concerning his arthritis; a job description from the City of Hampton; and a few other supporting medical records. This application was referred to the VRS Medical Board in January 2011.

[64 Va.App. 761] The Medical Board is " composed of physicians or other health care professionals who are not eligible to participate in" VRS. Code § 51.1-124.23. Among other duties, the Medical Board is charged, by statute, with " [i]nvestigating all essential health and medical statements and certificates filed in connection with disability retirement . . ." and " [s]ubmitting to [VRS] a written report of its conclusions and recommendations on all matters referred to it." Id. The Medical Board recommended denial of Blair's application on February 2, 2011.

Six days later, VRS issued its first application denial, and Blair, by counsel, sought review within VRS. In June 2011, the matter was re-referred to the Medical Board. As part of this review, the Medical Board considered all the previously reviewed materials as well as documentation regarding follow-up medical visits. The Medical Board again recommended denial, finding that Blair's conditions were not disabling. VRS again denied the application.

After his application was denied for the second time, Blair sought an informal fact-finding proceeding under the APA. As part of this proceeding, Blair was permitted to submit additional medical evidence. The matter was heard before a hearing officer on November 17, 2011. Blair was represented by counsel. At the disability hearing, Blair testified to the physical demands of his job as an equipment operator and described the effects of his stated medical issues. Dr. Duggan, who was a treating physician of Blair, described his certifications and expertise and testified regarding the nature of some of Blair's conditions and his treatment of Blair. Blair's wife, who had known Blair for ten years, and a friend of Blair relayed their observations of Blair's health over time. The friend also was Blair's supervisor from his prior employment with the physical plant at Hampton University, where Blair engaged in carpentry work for five years. All of the previously submitted records also were before the hearing officer.

After completing her review of the testimony and other materials, the hearing officer issued a seven-page report. The [64 Va.App. 762] report addressed all of the conditions that Blair alleged caused his need for disability retirement, including problems with his knees. In addition to her thorough review of each of Blair's allegedly disabling conditions, the hearing officer noted the following:

Difficult to convey in summarizing the various visits related to his claimed disabling conditions, but apparent in an overall review of the medical records submitted is that Mr. Blair was a patient who sought treatment for a particular ailment on one day or for a period of time, then complained about something entirely different . . . . His stated reasons for being unable to work at his job with the City of Hampton simply are not consistently corroborated by the medical records.

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Based on all that she had reviewed, the hearing officer found that " Mr. Blair has not met the requirements of Virginia Code § 51.1-156" and recommended to VRS that he be denied benefits.

In January 2012, the Medical Board reviewed the matter a third time. At that time, the Medical Board considered the medical evidence, including the testimony of Dr. Duggan from the informal fact-finding hearing. Once again, based on its review of the materials, the Medical Board recommended denial of Blair's application.

In June 2012, VRS denied, in a final case decision, Blair's application for disability benefits. The case decision noted that VRS had reviewed the medical evidence and the report of the hearing officer. VRS specifically found that " the medical evidence has not satisfied each element of [Code] § 51.1-156(E) . . . ." VRS specifically found that Blair was " not incapacitated from further performance of his duties" ; that to the extent that incapacity could be inferred from the evidence, the evidence did not " demonstrate that such incapacity was likely to be permanent" ; and that some of the conditions for which Blair sought disability preexisted his membership in VRS and the evidence did not indicate that such conditions " substantially worsened during [Blair's] employment" with the City of [64 Va.App. 763] Hampton. The case decision noted that the Medical Board had reviewed Blair's application on multiple occasions and had concluded each time that the medical evidence did not support an award of benefits.

Blair timely appealed the case decision to the circuit court in accord with the APA. The circuit court heard the matter in November 2013 and issued its letter opinion in May 2014. In the letter opinion, the circuit court reversed VRS's benefits determination, finding that " VRS ignored substantial evidence in the record . . . ." The circuit court then detailed its view of the evidence and found that Blair met the requirements of Code § 51.1-156. By order dated August 12, 2014, the circuit court directed VRS ...

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